After a lapse of 20 months, the loan market quoted interest rate (LPR) "interest rate cut" for the first time——


　　Promote the reduction of financing costs in the real economy (Rui Finance)

　　On December 20, the People’s Bank of China authorized the National Interbank Funding Center to announce the new loan market quote rate (LPR): 1-year LPR is 3.8%, down 5 basis points from the previous period; LPR over 5 years is 4.65%, no adjustment from the previous period.

Industry insiders believe that the decline in 1-year LPR reflects the continued increase in support for reducing financing costs in the real economy.

　　The main reference benchmark for loan interest rate pricing

　　This "interest rate cut" is the first adjustment of LPR after 20 months of the largest drop in a single month since the reform was set on April 20 last year.

　　What is LPR?

How is LPR calculated?

According to the People’s Bank of China, the loan market quoted interest rate (LPR) is quoted by representative quoting banks based on the bank’s loan interest rate for the best customers and based on open market operating interest rates plus points. The People’s Bank of China authorizes national banks The basic loan reference interest rate calculated and announced by the Inter-bank Funding Center.

At present, LPR has become the main reference benchmark for loan interest rate pricing; it is generated once a month and quoted independently by 18 quoting banks. The national inter-bank lending center takes the arithmetic average after removing the highest and lowest quotations and rounds to the nearest integer multiple of 0.05%. Calculated; there are mainly two varieties with a one-year period and a five-year period.

　　On the basis of referring to LPR, the bank comprehensively considers factors such as credit status, mortgage guarantee method, term, interest rate fluctuation method and type, and is determined by the borrower and lender through negotiation. LPR of the day.

　　After using LPR as the pricing benchmark, the loan interest rate is determined in the form of LPR plus and minus points, namely "LPR+n basis points", "LPR-n basis points" or "LPR+m%", "LPR-m%".

The loan interest rates for one-year and more than five-year periods are based on the directly corresponding LPR. The reference benchmark for loan interest rates for loans within one-year period and one-year to five-year period can be independently selected by the bank.

　　Give full play to the role of monetary policy in counter-cyclical regulation

　　The one-year LPR reduction will bring multiple effects.

Wen Bin, chief researcher of China Minsheng Bank, said that the one-year LPR reduction is mainly due to the narrowing of bank spreads.

"Since this year, banks have strengthened debt-side management and regulated innovative deposits, Internet deposits, and structured deposits. The overall cost of liabilities of banks has decreased. Combined with the cumulative effect of the two RRR cuts this year on cost reductions, the LPR quotation has therefore Down."

　　On December 15th, the People's Bank of China implemented the second round of RRR cuts during the year, and the two RRR cuts released a total of 2.2 trillion yuan in funds.

Dong Ximiao, chief researcher of China Merchants Union Finance, believes that the two rounds of RRR cuts this year have provided banks with long-term low-cost funds and reduced capital costs.

At the same time, since last year, the strengthening of deposit interest rate supervision and the adjustment of the deposit interest rate pricing mechanism have promoted the decline in the cost of bank liabilities.

　　Wen Bin believes that at present, China's economic development is facing triple pressures of shrinking demand, supply shocks, and weakening expectations.

Lowering the LPR interest rate at this stage will help play the role of monetary policy in counter-cyclical regulation and help the economy maintain stable and healthy operations.

　　“The decline in 1-year LPR is mainly to promote the decline of short- and medium-term loan interest rates and reduce the financing cost of the real economy. The LPR over 5-year period remains unchanged, mainly because it does not send a loose signal to the real estate market.” Dong Ximiao believes that this shows that the monetary policy is sound. The orientation of the government has not changed, and the next step will be to make monetary policy more flexible and appropriate through fine-tuning and pre-adjustment.

　　Continue to unleash the potential of LPR reform

　　It is worth noting that this adjustment is the fifth time that the 1-year LPR has been lowered since the implementation of the LPR mechanism in August 2019.

　　The People's Bank of China issued an announcement clarified that from January 1, 2020, financial institutions are not allowed to sign loan contracts that refer to the benchmark loan interest rate.

At present, LPR has become the main pricing basis for new loans issued by banks, financial companies, financial leasing companies, trust companies and other financial institutions; some financial institutions are also exploring the use of Shanghai Interbank Offered Rates (Shibor) and bonds in some loans. The rate of return is used as a reference benchmark.

　　Will the loan interest rate change with the adjustment of LPR?

　　The People’s Bank of China stated that the interest rate level of fixed-rate loans remains unchanged during the contract period. The specific interest rate level is determined according to the LPR plus or minus points specified in the contract at a certain time point or time period. Once the interest rate level is determined, it will continue until the loan is due. The day remains the same.

Floating interest rate loans shall be agreed in the contract for a certain period of time, and the specific interest rate level shall be calculated based on the corresponding period of LPR plus or minus a certain point difference, and the interest rate will fluctuate with the reference to the LPR changes.

　　The relevant person in charge of the People's Bank of China stated that a prudent monetary policy must be flexible and appropriate to maintain reasonable and sufficient liquidity.

Do a good job in cross-cyclical and counter-cyclical policy design, and improve the forward-looking pertinence of monetary policy.

Continue to unleash the potential of interest rate reform in loan market quotations, and promote the steady decline of corporate financing costs.

　　Reporter: Xu Peiyu